Benchmarks hover near neutral line in late afternoon session

Indian equity benchmarks continued their volatile trade hovering near the neutral line in the late afternoon session. Expectations of a major economic legislation getting parliament’s approval added some optimism on the street. Traders were seen piling position in Metal, Consumer Durables and IT stocks while selling was witnessed in Auto, Capital Goods and PSU sector stocks. In scrip specific development, Amtek Auto was trading firm on report that cash-strapped auto-component maker is planning sale of more overseas assets to reduce debt. Adani Transmission was trading in green after a foreign brokerage firm initiated coverage on the stock with buy rating. The company has also signed a purchase agreement with Credit Suisse AG of Singapore branch for its Indian rupee denominated so-called ‘Masala Bond’ of Rs 500 crore with a coupon of 9.10%. The market may remain volatile as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. July 2016 series to next month i.e. August 2016 series. The near month July 2016 derivatives contracts will expire on Thursday i.e. July 28, 2016.

On the global front, Asian markets were trading mostly in green while the European markets were trading mostly on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,600 and 28,100 levels respectively. The market breadth on BSE was negative in the ratio of 1228:1333 while 173 scrips remained unchanged.

The BSE Sensex is currently trading at 28119.70, up by 24.36 points or 0.09% after trading in a range of 28058.31 and 28141.49. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.86%, while Small cap index was up by 0.28%.

The gaining sectoral indices on the BSE were Metal up by 0.88%, Consumer Durables up by 0.75%, IT up by 0.50%, Power up by 0.45% and TECK up by 0.39% while, Auto down by 0.42%, Capital Goods down by 0.07% and PSU down by 0.01% were the losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 2.98%, Tata Steel up by 2.65%, Reliance Industries up by 0.89%, Power Grid Corporation up by 0.80% and NTPC up by 0.76%.

On the flip side, Coal India down by 1.22%, Hero MotoCorp down by 1.15%, Maruti Suzuki down by 1.11%, Lupin down by 1.04% and ICICI Bank down by 0.85% were the top losers.

Meanwhile, Central Board of Direct Taxes (CBDT) has came out with draft rules for determining the quantum of distributed income arising out of buy back of shares of unlisted companies for levy of tax. The tax authorities have invited comments and suggestion on the above draft rules by July 31.

The draft rule describes that where the share has been issued by a company on its subscription by any person, the paid up amount actually received by the company in respect of such share including any amount actually received by way of premium shall be the amount received by the company for issue of the share. Besides, where the company had at any time, prior to the buy-back of the share, returned any sum out of the amount received in respect of such share the amount as reduced by the sum so returned would be the amount received by the company for issue of the share.

The draft stated that the Finance Act, 2016 amended the definition of distributed income, the consideration paid by the company on buy back of shares as reduced by the amount, which was received by the company for issue of such shares, determined in the manner as may be prescribed. The present amendment that will take effect from June 1, seeks to remove the limitations created by the restrictive meaning of buy back under the existing provisions.

In 2013, the Centre had come up with a provision to subject unlisted companies resorting to buyback of shares to 20 per cent tax on the incomes distributed by them through this route. This was essentially aimed at curtailing companies from distributing dividends under the garb of buyback of shares.

The CNX Nifty is currently trading at 8632.65, down by 3.00 points or 0.03% after trading in a range of 8620.05 and 8643.95. There were 24 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 3.03%, Tata Steel up by 2.69%, Yes Bank up by 1.95%, ACC up by 1.43% and Ambuja Cement up by 0.99%.

On the flip side, Coal India down by 1.45%, Lupin down by 1.29%, Kotak Mahindra Bank down by 1.22%, Hero MotoCorp down by 1.20% and Maruti Suzuki down by 1.18% were the top losers.

The Asian markets were trading mostly in green; Jakarta Composite increased 1.62 points or 0.03% to 5,222.42, KOSPI Index increased 15.02 points or 0.75% to 2,027.34, Taiwan Weighted increased 33.12 points or 0.37% to 9,024.79, Shanghai Composite increased 34.34 points or 1.14% to 3,050.17 and Hang Seng increased 136.29 points or 0.62% to 22,129.73.

On the other hand, Nikkei 225 decreased 237.25 points or 1.43% to 16,383.04 and FTSE Bursa Malaysia KLCI decreased 6.78 points or 0.41% to 1,661.48.

The European markets were trading mostly in red; France’s CAC decreased 30.76 points or 0.7% to 4,357.24, Germany’s DAX decreased 24.92 points or 0.24% to 10,173.32, while UK’s FTSE 100 increased 10.64 points or 0.16% to 6,720.77.